Challenges for IPP Promotion in the Indian Power Sector
February 4 - 5, 2008
India – Japan Energy Forum Seigo MIZUNUMA Executive Managing Officer, Department Director International Power Business Dept.
J-POWER 1
C o n t e n t s Expanding relationship between India and Japan
. Track Record in the Indian Power Sector Cooperation in the Indian Power Sector between India and Japan Business model in the power sector
2
Expanding relationship between India and Japan
Joint statement by Japan government and India government ( 22.8.2007) - Launch immediate to negotiation for the conclusion of EPA - Development of infrastructure and Promotion of Manufacturing, Trade and Investment ( Promotion participation of Japanese companies in India power sector) - Human Resource Development for Promotion of Manufacturing India is the top country to receive Japan’s ODA loan. (1.5bil USD ; 2008)
Japanese auto companies have rapid expansion program to establish huge auto factories in India. ;Suzuki Co. Ltd, Honda Co. Ltd, Toyota Co. Ltd, Nissan Co. Ltd
3
. Track Record in the Indian Power Sector
Recent developments in Japanese manufacturer’s activities in India power sector - TOSHIBA got order of Turbine & Generator (5 800MW) in
Mundra Ultra Mega Project. - Mitsubishi Group instituted Joint company of Turbine & Generator with L&T in India.
J-POWER continues power consulting business in India.
4
. Track Record in the Indian Power Sector Track Record of Consulting Business by J-POWER in India (1)
No
Name of Project
Services
Country
Client
Object
Description for the Project Type of Power Plant
Installed Capacity
Duration of Services
T-1
Anpara “B” CoalFired Thermal Power Plant
Definite Design Supervision
India
UPSEB
Power Generation
Coal-Fired
500 MW × 2
Sep. 1985 – Dec. 1993
T-2
Assam Gas Turbine Power Station
Definite Design, Construction Supervision
India
NEEPCO
Power Generation and Transmissi on Line
Gas Turbine
Total 300 MW
Jun. 1990 – Dec. 1992
T-3
Kotadadem Thermal Power Rehabilitation
Engineering & Performance test
India
APSEB
Power Generation
Coal-Fired
T-4
Bakreshwar CoalFired Thermal Power Station Unit No. 1 to 3
FS, Basic/Definite Design, Construction Supervision
India
West Bengal Power Development Corporation
Power Generation
Coal-Fired
210 MW × 3
Feb. 1995 – Aug. 2000
T-4
Anpara “B” CoalFired Thermal Power Plant – Ash Utilization
FS, Specification/Engine ering for Ash Utilization System (with DESEIN)
India
UPSEB
Power Generation
Coal-Fired
500 MW × 2 – Ash reused/utilization plant
May. 2000 – Jul. 2000
T-6
Sipat Coal-Fired Thermal Power Station (SC)
FS, Basic Design & Engineering support
India/Madhy a Pradesh State
NTPC
Power Generation
Coal-Fired/SC, 24.1MSP, 538/566°C
660 MW x 3
Aug. 1998 – Aug. 1999, Feb. 2000 – Dec. 2000
T-7
Bakreshwar CoalFired Thermal Power Station Unit No. 4 & 5
FS, Basic/Definite
India
West Bengal Power Development Corporation
Power Generation
Coal-Fired
210 MW × 1
Sep. 1999 – Jan. 2000
T-8
Bakreshwar CoalFired Thermal Power Station Unit No. 4 & 5 (under construction)
Definite Design, Construction Supervision
India
WBPDC
Power Generation
Coal-Fired
210 MW × 1
Mar. 2003 – Oct. 2007
T-9
Bakreshwar CoalFired Thermal Power Station Unit No. 6
FS
India
WBPDC
Power Generation
Coal-Fired/SC, 24.1MSP, 538/566°C
500 MW × 1
Aug. 2005 – Feb. 2006
T-10
Neemrana and Haldia Industrial Estates Thermal Power Plant
FS
India
JETRO / METI
Power Generation
-Coal Fired -Gas Fired (Captive)
600 MW × 2 23 or 60 MW × 1
Nov. 2006 – Feb. 2007
Jun. 1996 – Apr. 1996
5
. Track Record in the Indian Power Sector Track Record of Consulting Business by J-POWER in India (2)
No
Name of Project
Services
Country
Client
Object
Description for the Project
Duration of Services
H-1
Srisailam Left Bank
Definite Design, Construction Supervision
India/Andhr a Pradesh State
Andhra Pradesh State Electricity Board (APSEB)
Power Generation
Hydro
H-2
Srisailam Transmission
Definite Design, Construction Supervision
India/Andhr a Pradesh State
Andhra Pradesh State Electricity Board (APSEB)
Transmission
Transmission
H-3
Maharashutra Pump up Project
FS
India
MSSEB
Power Generation
Hydro
Sep. 1994 – Nov. 1994
H-4
Gatogarl Pump up Project
FS
India
GOMID
Power Generation
Hydro
Jan. 1996 – Jul. 1999
H-5
West Bengal Transmission System
Definite Design, Construction Supervision
India/West Bengal State
West Bengal State Electricity Board (WBSEB)
Transmission
Transmission
Jul. 1997 – Jun. 2000
H-6
Umiyam Hydro Project
Construction Supervision
India
Megaraya
Hydro
Oct. 1998 – Sep. 2000
H-7
Hydro Power Station Rehabilitation
FS
India
APGENCO, etc.
Power Generation
Hydro
Sep. 2001 – Mar. 2002
H-8
Purulia Hydro Power (under construction)
Basic/Definite Design, Construction Supervision
India/West Bengal State
West Bengal State Electricity Board (WBSEB)
Power Generation
Hydro
900 MW
Aug. 1990 – Dec. 1992, Oct. 1995 – Feb. 2008
H-9
Ghatghar Hydro Power (under construction)
Special Assistance, Construction Supervision
India
Government of Maharashtra Irrigation Department
Power Generation
Hydro
200 MW
Nov. 1994 – Jan. 1995, Oct. 1995 – on going
900 MW
Dec. 1988 – on going
Apr. 1994 – on going
6
. Track Record in the Indian Power Sector BAKRESWAR Thermal Power Plant
1. Project Outline • Project Site: Bakreswar in West Bengal (260km northwest far from Kolkata) With consulting services by J-POWER, West Bengal Power Development Corporation Limited (WBPDCL) has driven their development plans, and presently owns and operates 3 x 210 MW units (Unit No.1, 2 & 3) at their Bakreswar Thermal Power Plant located in northwest part of West Bengal state and 2 x 210 MW (Unit No.4 & 5) additional units are under implementation. The Unit No.1, 2 & 3 were financed by Japanese ODA loan and the additional units No.4 & 5 are also financed by Japanese ODA loan. 2.
Scope of Service • DPR, D/D,Tender Evaluation ,Construction Super vision (review)
3.
Current Situation • COD: Unit.1) Nov. 2000 / Unit.2) Apr.2001 / Unit.3) Oct.2001 / Unit.4) July.2007/ Unit.5) Oct. 2007
7
. Track Record in the Indian Power Sector
PULURIA Hydro Pumped Storage Power Plant 1. Project Outline
•
Project Site: Puluria in West Bengal (50 km from Jamshedpur ) The Purulia Pumped Storage Power Station owned by WSEDCL will contribute to more efficient operations of the electric power system, whose primary power source (over 90 percent) is coal-fired thermal power, and will supply electricity during evening peak hours. Funded by Japanese government ODA initiatives, the power station, when completed, will deliver maximum power of 900 MW with four units supplying 225 MW each.
2.Scope of Service • DPR,D/D,Tender Evaluation ,Construction Super vision 3.Current Situation (Commissioning) • Unit 1) Jan. 2008 Unit 2) Nov.2007 Unit 3) Aug.2007 Unit
4) July. 2007
4. Main Equipment & Civil Construction Civil Contractor: Taisei Co., Ltd. Main Equipment (Turbine) Type : Francis Manufacture: Toshiba Co., Ltd. 8
Cooperation in the Indian Power Sector between India and Japan
Cooperation in huge power Infrastructure development that keeps sustainable economic growth
To support Japanese manufacture’s business expansion in India through power development To support improvement of energy efficiency in the Indian Power Sector
- In ASIA-PACIFIC PARTNERSHIP (APP) at Japan in 2007, Takasago coal fired power plant (COD:1968) still keeping high efficiency impressed on participant in APP
To support environment issue solution (air pollution/ global warming)
9
Business model in the power sector
(1) Technology, business know-how, monetary fund from the Japan side (2) General concern regarding investment in the Indian power sector (3) Business model in collaboration with both Indian and Japanese public sectors
10
Business model in the power sector
(1) Technology, business know-how, monetary fund from the Japan side
Advanced technologies of development and operation of high efficient Power Station reducing environment impact
- High efficiency generation technology (USC) - DeSOx technology - DeNOx technology - Dust removal technology
Improvement of efficiency of exiting old power plant Know how of management control and efficiency provided by Japanese private power companies
Providing ODA loan and Investment loan by Japanese public sector (JBIC) 11
Business model in the power sector
(1) Technology, business know-how, monetary fund from the Japan side Isogo New#1 Ultra Super Critical (USC) Coal fired power plant - 25MPa, 600/610 deg. C - Air Emission regulation (SOX: 20ppm, NOX: 20ppm, TSP:10mg/Nm3 - Gross efficiency : 45% (LHV base) Compared with exiting old power plant in India (gross efficiency 30% LHV base), technology of USC can reduce 33% about CO2 emission and coal consumption.
12
Business model in the power sector
(2) General concern regarding investment in the India power sector
Prospective change in financial improvement of SEC
Current data and statistic trends are not likely to prove realization of financial improvement of State Electricity Companies.
Open policy of power transaction in India 1) EA Act and UMPP scheme provide following schemes. - Multilateral Power Purchase are allowable - Bank LC, Escrow Reserve provided by PPA scheme of UMPP 2) However, There are still concerns raised by foreign power developers - Payment Security has not been confirmed as real function scheme. - In the event of PPA default by State Electricity Company, foreign power developers have less power to resume tariff recovery mechanism timely and quickly than local IPP developer. - To promote foreign investment in the Indian power sector, dialog among both governments is expected. 13
Business model in the power sector
Vietnam Tokyo Electric & Sumitomo Kyushu Electric & Sojitz Sumitomo
Philippines J-Power & Sumitomo Marubeni Tokyo Electric Kansai Electric Tokyo Electric & Kyushu Electric & Marubeni & Mitsubishi
Indonesia Marubeni Tokyo Electric& Mitsui Toyota Tomen
India Marubeni
Taiwan J-Power& Sojitz Tokyo Electric & Sumitomo
Thailand J-Power Kansai Electric Chubu Electric & Toyota Marubeni
Korea Marubeni
China J-Power& Sojitz Marubeni
IPP track record in Asia by Japanese companies
14
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Business model in the power sector
IPP track record in Asia by Japanese companies(1)
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IPP track record in Asia by Japanese companies(2)
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Business model in the power sector
IPP track record in Asia by Japanese companies(3)
17
Business model in the power sector
(3) Business model in collaboration with public sectors To mitigate risk concerns raised, we have been promoting studies on several business model.
Captive power Pumped-storage power generation Biomass power Retrofit of existing old power plant 18
Business model in the power sector
(3) Business model in collaboration with public sectors Captive
power
Many Japanese factories in India demand high quality electricity of stabile frequency and no black-out.
We studied captive power business possibility at industrial estates in India in 2006. We found followings requirements. (1) Sufficient gas supply (2) Appropriate amount of electric demand in industrial estates (3) The exemption of legal restriction for captive power The exemption of the requirements of minimum 26% investment and 51% electricity consumption in relation to Group captive power projects
We are exploring possibilities for two approaches which are based on captive power plants. 19
Business model in the power sector
(3) Business model in collaboration with public sectors Captive power model (case
)
Small / Middle Gas Power Plant
Private Partnership Loan
Public Public Sector Sector
(Fuel (Fuel Supply Supply and and Transportation Transportation SPC) SPC) Fuel (gas) • Development of gas source • Development of fuel transportation • Provision of dedicated line
Local /Japanese Local/Japanese Developer Developer IPP IPP
PFC PFC Local Local
Investment
Japanese Japanese developer developer
(Dedicated Line) (PPA) A A
B B
C C
Industrial Zones
20
Business model in the power sector
(3) Business model in collaboration with public sectors Captive power model (case2) Large Gas Power Plant
Private Partnership Loan
Public Public Sector Sector
(Fuel (Fuel Supply Supply and and Transportation Transportation SPC) SPC) Fuel (gas)
Local /Japanese Local/Japanese developer developer IPP IPP
PFC PFC
Investment
Local Local Japanese Japanese Developer Developer
• Development of gas source
PTC PTC
(Power (Power Trader) Trader)
State State Government Government
Industrial Zones
A A
B B
C C
State Distribution Companies
A A
B B
C C
Special Preferable Distribution Guarantee
21
Business model in the power sector
(3) Business model in collaboration with public sectors Pumped-storage power generation Benefit of pumped-storage power generation (1) Stability of power grid system (2) Higher efficiency of Grid System
Private loan / Investment
ODA loan
IPP IPP Public Public Sector Sector Electric Electric /Mechanical /Mechanical Civil Civil Portion Portion Portion Portion Construction
Joint Joint Company Company IPP IPP & & Public Public Sector Sector
PPA with PTC
National National Grid Grid
State State Grid Grid
Operation
22
Business model in the power sector
(3) Business model in collaboration with public sectors Biomass power
Bagasse, Rice husk, Wood Chip, Jatropha are abundant non fossil fuel in India. Using non fossil fuel above, large scale development of biomass power project (10MW ) in India are expected.
Development of biomass power project is beneficial to both India and Japan.
Since India heavily depends on fossil fuel, biomass power project directly and efficiently contributes to reduction of carbon dioxide emission. Japan needs emission trading to achieve target goal of emission reduction set by Kyoto Protocol. (6% reduction compared with emission level in 1990). India is top country to provide CDM to developed countries as a host country of CDM.
More than 50 projects in India were approved as CDM project by UN.
23
Business model in the power sector
(3) Business model in collaboration with public sectors Biomass
Agriculture Agriculture Sector Sector
Fuel
power
Electricity
IPP IPP company company
Biomass fuel collection and supply
State State electric electric company company
Support
Public partnership
CDM
Japanese Japanese sponsor sponsor
State State government government Tariff intensive Tax exemption - Mandatory purchase of generated electricity
24
Business model in the power sector
(3) Business model in collaboration with public sectors Retrofit of existing old power plant Improvement of efficiency - Reduction of Fuel consumption - Reduction of carbon dioxide
IPP IPP developer developer Investment
Existing Existing old old power power plant plant
Retrofit / Rehabilitation
Renewal Renewal Power Power Plant Plant
CDM
Japanese Japanese sponsor sponsor
PPA
PTC PTC Power Power trader trader
25
